In a country of modern office towers, luxury condos, gated communities, and stylish outdoor cafes, 41 million people live in extreme poverty. In one major city, the extremely poor cover fifty city blocks, either living on the streets or in makeshift dwellings, without electricity, sanitation, or clean water. They suffer from the diseases of poverty, particularly intestinal parasites. This underclass is ignored, if they are not scorned, by the country’s middle and upper classes. This is not a country in Latin America; it is the United States and the fifty blocks of desperately poor are in Los Angeles, one of the richest cities in the world.
America’s Latin American Reality
Politically and socially, the United States is beginning to look more and more like an early twentieth century Latin American country. In fact, with its burgeoning underclass and tiny outrageously wealthy oligarchy, its social structure resembles that of the Central America’s Banana Republics—named for their dependence of banana exports in the first part of the twentieth century. These countries (El Salvador, Nicaragua, Honduras) had and continue to have masses of poor people, who lack decent jobs and any form of social protection. Politically, brutal dictatorships have given way to problematic democracies where respect for the rule of law is generally absent, and criminal violence and police brutality rampant. Their middle classes are politically weak and proportionately small. Violence and poverty have been driving millions of Central Americans to migrate northward, seeking a better life north of the Rio Grande. In an tragic twist of fate, Central Americans are seeking refuge in a land where the opportunity for a better life is rapidly receding.
Before you balk at the comparison I am drawing, note that in 2007, 1 percent of the American population received 23.5 percent of national income, following an upward trend that began sooner and has gone farther than in Europe. The U.S. has 535 of the world’s 2000 billionaires. According to one expert, 40 percent of the American population will soon account for only 10 percent of the nation’s wealth. America’s super rich have been able to influence the political system in ways that have diminished their contributions to the wider society and increased their profits. In 1952, corporate taxes funded about 32 percent of U.S. government expenditures; now these taxes fund 10.6 percent. The US tax system has become increasingly regressive and the situation has been further aggravated by the ability of corporations and wealthy individuals to reduce taxes through tax havens—note that highly regressive taxation and tax avoidance has been a long-standing Latin American phenomenon. The rich are above the law; that is, they are able to circumvent it in the United States as they have been able to for so long in Latin America. The recent Trump tax reform will exacerbate inequality even further since it cuts corporate taxes disproportionately. Meanwhile, America’s middle and working classes are shrinking. This is particularly apparent in big cities, where middle class neighbourhoods are disappearing and where the wealthy have isolated themselves in walled communities. A burgeoning academic literature points to the relationship between concentrated wealth, high inequality, and extreme material deprivation, and increased crime and violence.
Blowback from Economic and Foreign Policy
In the United States, decades of labor-saving technological developments have been behind substantial job losses. But government (and big business-driven) policies that sought to dismantle the state’s role in economic and social development, have also been instrumental in fostering rising inequality and poverty; these policies include ones that have weakened trade unions and thereby contributed to their growing inability to defend wages, benefits, and working conditions. Deregulation, particularly in the financial realm, fostered speculation that was particularly devastating to low income people. The election of Trump, and the sharp polarization of American politics that we see today, is, in considerable part, a consequence of the social deterioration that has arisen from market liberalization at the service of corporate America.
But economic hardship is not the only source of Trump support. The rising influx of migrants, mainly from Mexico but also from Central America, has also been a source of popular angst that Trump has played on in order to garner political support. Among the foreign-born living in the United States, migrants from Mexico and Central America constitute the largest group at 37 percent. As I discussed in an earlier post, the influx of Mexicans into the United States was a case of blowback, since a variety of U.S. policies, particularly pressure on Mexico to liberalize corn, rice and bean imports, was extremely harmful to poor Mexican farmers, triggering the migration of massive numbers of poor northward. U.S. policy towards Central America has also been counterproductive to the peace and prosperity of the region. From early interventions at the beginning of the twentieth century (at the behest of United and Standard Fruit), to a stubborn commitment to a military solution to the civil wars of the 1980s and a refusal to recognize the socially driven nature of those conflicts, to the misguided commitment to market liberalization as the panacea for the economic and social difficulties of the region, U.S. policy has contributed to the poverty and violence that has fueled migration northward from these countries. U.S. foreign policy in the region has been driven, if not by U.S. business interests, then by a misguided geopolitical understanding of the sources of political instability. U.S. foreign policy toward Central America has not served the American public; indeed many U.S. citizens have recoiled at the use of American tax dollars to support repressive dictators in the region.
With a small and wealthy oligarchy calling the shots, polarizing politics, strong-man populism, rising inequality, a substantial and increasing number of the population facing extreme poverty, the United States is looking more and more like its neighbours to the south. Its substantial Latin American migrant population came to the U.S. to escape the very conditions that are now increasingly characterizing the American reality. They came seeking the American dream—a dream that is gradually turning into a classic Latin American nightmare.